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An example of how indifference curves are obtained as the level curves of a utility function. A graph of indifference curves for several utility levels of an individual consumer is called an indifference map. Points yielding different utility levels are each associated with distinct indifference curves and these indifference curves on the ...
For example, every point on the indifference curve I1 (as shown in the figure above), which represents a unique combination of good X and good Y, will give the consumer the same utility. Indifference curves have a few assumptions that explain their nature. Firstly, indifference curves are typically convex to the origin of the graph.
An example indifference curve is shown below: Each indifference curve is a set of points, each representing a combination of quantities of two goods or services, all of which combinations the consumer is equally satisfied with. The further a curve is from the origin, the greater is the level of utility.
In the case of two goods and two individuals, the contract curve can be found as follows. Here refers to the final amount of good 2 allocated to person 1, etc., and refer to the final levels of utility experienced by person 1 and person 2 respectively, refers to the level of utility that person 2 would receive from the initial allocation without trading at all, and and refer to the fixed total ...
Whether indifference curves are primitive or derivable from utility functions; and; Whether indifference curves are convex. Assumptions are also made of a more technical nature, e.g. non-reversibility, saturation, etc. The pursuit of rigour is not always conducive to intelligibility. In this article indifference curves will be treated as primitive.
An indifference curve can be detected in a market when the economics of scope is not overly diverse, or the goods and services are part of a perfect market. Any bundles on the same indifference curve have the same utility level. One example of this is deodorant. Deodorant is similarly priced throughout several different brands.
An indifference graph, formed from a set of points on the real line by connecting pairs of points whose distance is at most one. In graph theory, a branch of mathematics, an indifference graph is an undirected graph constructed by assigning a real number to each vertex and connecting two vertices by an edge when their numbers are within one unit of each other. [1]
Figure 1: An increase in the income, with the prices of all goods fixed, causes consumers to alter their choice of market basket. The extreme left and right indifference curves belong to different individuals with different preferences, while the three central indifference curves belong to one individual for whom the income-consumption curve is shown.